Nucleation, texture development, and phase equilibria were observed during templated grain growth (TGG) of (Na0.5K0.5)0.98Li0.02NbO3 (NKLN) via in situ X-ray diffraction (XRD). Initially, NaNbO3 templates and NKLN matrix powder exist as distinct phases with unique lattice parameters. Above 850 degrees C, the templates and matrix begin to react via interdiffusion as characterized by an increase in diffuse scattering between the NaNbO3 and NKLN peaks. This process intensifies immediately prior to template growth, leading to merging of diffraction peaks for these two phases. TGG in this system is thus homoepitaxial in nature as it occurs after the NKLN matrix and NaNbO3 templates form a solid solution. The degree of alignment in the matrix phase is quantified in situ using the MarchDollase parameters r and f. The degree of orientation of the textured NKLN mirrors the initial alignment of the template particles (r similar to 0.3), while the texture fraction f increases from 0.04 to similar to 0.67 after 3 similar to h at 1138 degrees C. This increase in texture fraction follows n similar to=similar to 1/3 power law kinetics consistent with liquid-phase-assisted normal grain growth on plate-like templates. As the observed templatematrix interdiffusion and the onset of texture development proceed extremely rapidly, this work demonstrates the utility of in situ XRD for observing details of TGG that cannot easily be seen via ex situ methods.